When you embark on the journey to look at an opportunity, to find a solution that solves a pain point for the masses and to build an enterprise around it, then you are as close as you can get to becoming a creator. Because the way a company as an entity is structured, it is given life, a new identity and a lifetime of its own—and everyone involved with it are nothing but employees along the dotted lines of its lifespan.
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| Vijay Anand |
Companies can outlast their founders. They have the innate capacity to do so, but a lot of it seems to depend on one or two crucial elements—the ability of the company to evolve its offerings over time, and secondly (and most crucially) the ability of the founder to find a successor to sit at the helm of the company and lead it as if it were her own vision. One of the things you will soon realize when it comes to entrepreneurship is that it is overrun by the case of extremes. In this scenario, you would find founders who are possibly very reluctant to pass on the baton, and at times founders who are ever so eager to find someone who can take it up and run with it even before it’s ready to be handed over. Both the moves are rather risky, and you jeopardize the possibility of either handing over a company before it is ready for take off or a company that might have become too rigid to be able to adapt itself in the hands of the succeeding founder.
If you are a founder who is planning an eventual successor, the rule that experts often quote seems to be one that I agree with; build the company as if someday someone else will be taking over. From that perspective it helps to keep the thought of a professional CEO at the back of your mind, because you will realize that you subconsciously start making decisions and setting processes within the company that will be efficient even in the near- to mid-term. You also get over the mental barrier that once a company is incorporated, you are no longer the owner of the company, but more like a super-employee—playing the role of an executor and stakeholder together but can never don both the hats at the same time.
Here are some other tips that would greatly help:
- It is always better to find someone within the company to groom and take over rather than bringing someone from outside; though that route equally has its advantages (especially in terms of fresh thinking). But it most probably would give you and your board the peace of mind to know that the successor is one with whom you have worked and who understands the vision of the company while being groomed.
- When you finally get to the day when you are ready to let go, do so completely. Bringing in a CEO who will report to you, makes no sense—because in the true nature of all humans, you will undermine the strength of the successor. Step back and get out of the way once the initial trust is built
- Communicate freely, and most importantly, disagree—remember that you brought in the new CEO so that he can do something radical that you haven’t been able to do; which also means that there will be some changes that will be made to make that work. So while you will initially be holding on to the edge of your seat, ensure that you communicate well, and most of all, have a mutual respect for each other so that even if you disagree on a decision, you will try to understand and accept it as things change and start to bear fruit.
- Give the successor the trust of the team.
- Step back, give up the spotlight, and find something to occupy yourself—if you don’t, you will find yourself wanting to take back that spotlight time and time again and you will soon find yourself losing the respect of your teammates.
While this is rather a short list of things to keep in mind, if you are asking when it is a good time to find a CEO, you are in luck of having read my mind. When to bring in a successor: I am often asked this question by some of the companies that I work with and ironically most of them fall under one extreme of the succession planning dilemma—they are all young, which is actually good news.
Figuring out the timeline to bring in succession is a crucial one and this is what I would put some thought into:
a) Identify the reason: Are you trying to bring in a professional CEO because of limitations that you carry as a CEO or is it because that you are hoping that someone would relieve you of some burden? The latter does not require a CEO but expansion of a team that can help.
b) Understand team growth: The CEO is the apex of any organization. And whether you like it or not, the strength, vision and caliber of the CEO caps the immediate growth and momentum of any organization. And hence I would bring in a CEO as the last person on the list of managers who will come in. There is a certain rule to expand your team—marketing, finance, HR, strategy, operations, and then possibly comes the office of the CEO. It’s almost like the election for the Prime Minister when picking the CEO because the opinion of the other crucial "executors" will matter a lot in making the team work.
c) Understand the growth of the company: Once you've passed through the initial stages of the company, you will be able to envision the way this company will grow, the momentum that it could garner, and some of the complexities that will arise as it wades that path. At some point you will realize that the complexities of the organizations will outbid your ability to adapt and learn. And at every such point, bring in a manager who posseses that strength to bring it under control. The final seat would be that of the CEO.
d) Think of career ladders: One of the mistakes that you can commit when looking for a CEO is find one who will lift the burdens off your shoulders to focus on other things, but then not be the perfect fit when it comes to building this company for the next five to six years. There is nothing worse for a company than it getting a new face every other year. If you are a company which has just gone past the first or second round of funding, then can you see the new CEO build this company for another two rounds or even evolve beyond that? Can you see her building the company's revenue stream on a 10 to 20 times growth path over the next five years? If not, don’t waste time.
e) Be selfish: That sub-heading could get me into trouble, but I truly believe that a bit of selfishness helps here. In every company that you build, the one possible thing that it should lead you to is to push you to the limits of what you can envision, execute and lead. The world is full of stories about people who accomplished extraordinary things under rather extraordinary conditions, and the glory of an entrepreneur is in taking an organization to that point where you reach a new high; as an individual and a professional.
Go through the points and think through them. They are basics but they can also help identify your own reasons as to why you are doing this, and this is not a decision you want to make for the wrong reasons. Most of all, don't forget to have some fun through the process—while you enjoy the likeness of a creator, so to speak.
Vijay Anand is an entrepreneur who has experience starting and building various technology startups, starting at the young age of 16. He is currently the Incubation Manager at RTBI, an incubator in IIT Madras that focuses on building rural-focused businesses. He is also the founder of Proto.in, India’s premier technology showcase event and is involved in various initiatives that are shaping up the emerging entrepreneurial scene in India. He blogs as The Startup Guy at www.vijayanand.name and tweets regularly at www.twitter.com/vijayanands.
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